The onset of value-added tax (VAT) in the Gulf countries could be as significant as the oil boom of the 1960s, says a consultancy in the region.
A variety of businesses must begin charging the tax on January 1, 2018, marking a cultural shift in a region where petrochemical wealth has typically spared governments the need to raise tax revenues.
“The progressive implementation of VAT throughout the GCC from 1 January 2018 marks the start of some of the most exciting, dramatic and far-reaching socioeconomic changes in the region since the discovery of oil reserves in commercial quantities during the 1960s,” says Justin Whitehouse, Deloitte Middle East VAT leader.
The consultancy suggests some retailers will decide initially to cover all or part of the tax themselves in a marketing move aimed at maintaining market share.
Deloitte predicts a spike in customer activity in the days leading up to December 31, 2017 as consumers bring forward their purchases to avoid the tax.
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